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pare, publish, and file with the Commission a uniform classification of freight as the basis of rates for the transportation of property in the United States; and the Commission should be authorized and directed, upon investigation from time to time, to make such amendments as may appear to be reasonable and necessary. In case the railroads refuse or neglect within the time specified to comply with this direction, the Commission should be authorized and required to prepare such classification, the adoption of which by all carriers subject to regulation shall be made compulsory by suitable penalty. In view of the continued non-action of the carriers, and the action already had in Congress, it might be the wiser course to pass the bill now pending in the Senate.
THROUGH ROUTES AND THROUGH RATES. In each of our annual reports from 1888—the year after the Commission was organized—until the present time we have recommended · amendment of the third section of the act to regulate commerce by providing a remedy or mode of procedure for the enforcement, in proper cases, of through routes and through rates over connecting lines of carriers. (Second Annual Report, pp. 70–71; Third, ib., p. 107; Fourth, ib., pp. 65–66; Fifth, ib., p. 68; Sixth, ib., p. 74; Seventh, ib., pp. 42, 43, 78; Eighth, ib., pp. 54-60, 78; Ninth, ib., p. 111; Tenth, ib., p. 116.)
We again urgently recommend such amendment because its importance is more and more deeply impressed upon us by frequent complaints of the denial, both to carriers and to shippers, of the reasonable, and from a commercial standpoint often necessary, facilities of through routing and through rating.
In a case recently presented to and passed upon by the Commission (The New York, New Haven and Hartford Railroad Company v. New York and New England Railroad Company), elsewhere referred to in this report, the necessity for a process compelling through routes and through rates was strikingly illustrated. In this case it was shown that the only available route for the shipment of coal from Newburg, N. Y., to certain points in the State of Connecticut was over the road of the New York and New England Railroad Company to Waterbury, New Britain, Hartford, and Willimantic, and thence over the road of the New York, New Haven and Hartford Railroad Company. The only rate which could be made from Newburg to the points of destination in Con. necticut on the road of the latter company, in the absence of a joint through rate agreed to by the two companies, was the sum of the local rates of those companies. The uncontradicted testimony showed that coal could not be shipped from Newburg to the points of destination in Connecticut under rates as high as the combination of the separate local rates of the carriers, that such combination rates would be prohibitory, and that coal could only be shipped over the routes named under rates less than the sum of the local rates.
The New York and New England Railroad Company was willing to
make, and in fact had made, through rates under which the shipment could be made by reducing its oun local rates to points of junction with the road of the New York, New Haven and Hartford Railroad Com. pany, and adding these reduced rates on its own line to the full local rates on the lines of the latter company. This was objected to by the New York, New Haven and Hartford Railroad Company on the ground substantially that such through routing and through rating would, by making competition practicable, injure its business in transporting coal from Jersey City wholly over its line to the same points of destination in Connecticut-the haul over its line from Jersey City being much longer than would be its haul from points of junction with the New York and New England Railroad on coal from Newburg. The Com. mission, under the law as it now stands, was compelled to declare unlawful the through rates so made by the New York and New England Railroad Company, and to hold that the only through rates which could be made, in the absence of an express agreement between the companies, were combinations of their full local rates. In such a case a carrier, situated as was the New York and New England Railroad Company, is deprived of the traffic, and shippers, like the coal dealers at Newburg and the mine operators who supply them, are cut off from a market by being debarred from the only available route thereto, while the carrier objecting secures a monopoly of the traffic.
In the case before the Commission of the Little Rock and Memphis Railroad Company v. The East Tennessee, Virginia and Georgia Railroad Company ct al. (3 I. C. 0. R., 1) it appeared that the road of the Little Rock and Memphis Railroad Company from Memphis to Little Rock was shorter than that of its rival between those points, and afforded a reasonable route for the traffic in question, and that the maintenance of a throngh route via Memphis to Little Rock over the road of the Little Rock and Memphis Railroad was not only in the interest of the Little Rock and Memphis Railroad Company, but also in the interest of the public. It was said by the Commission in its report in that case: The facts in this case clearly develop the importance
of some amendment which shall provide a mode of procedure for carrying into effect the establislıment of through routes and through rates and the equitable apportionment of the rates established in cases where the refusal of such routes and rates works an unlawful preference. As the statuto now stands, there is no way apparent in which practical relief can be afforded to the complainant (The Little Rock and Memphis Company) without authority to provide for the necessary divisions being conferred either upon the Commission, the courts, or some other tribunal.
These instances are illustrative of many others. constantly brought to our attention. It is easy to perceive that they work great hardship and often result in gross discriminations against carriers, shippers, and consumers. Justice to a railroad does not require that it be allowed to confine consumers at its local stations to particular markets of supply in order that it may have the benefit of the longest possible laul on:
every shipment. A carrier ought not to be permitted to refuse ordinary and reasonable facilities in receiving and forwarding freight brought to it by connecting lines, nor to unjustly discriminate by affording such facilities to one connection and refusing them to another, particularly when its connections offer to make all the concessions necessary to the formation of a through rate less than the sum of the locals of the several roads, leaving to such carrier its full established local as its share of such through rate. The extensive abuse which may be made of the discretion of carriers in the matter of affording or refusing these facilities has been illustrated in some of the association agreements.
Prior to the decision of the Supreme Court, rendered March 22, 1897, in the case of the United States v. The Trans-Missouri Freight Association (166 U. S., p. 290), agreements were openly made by many competing carriers with each other to deny these facilities to connecting carriers and those desiring to ship over their lines for the express purpose of enforcing compliance with the agreements of the contracting carriers, fixing rates, and controlling the division and movement of freight. In our report to the Congress for 1893 this practice and its discriminating and otherwise injurious effects were pointed out. (See 7th Annual Report of I. C. C., p. 39.) In that report, a part of the then agreement of the Southern Railway and Steamship Association was set forth as follows:
SEC. 2. For the mutual protection of the various interests, and for the purpose of securing the greatest amount of net revenue to all the companies parties to this agreement, it is agreed that what are termed Western lines shall protect the revenue derived from transportation to what are known as Eastern lines, under the rates as fixed by the association, so far as can be done by the exaction of local rates, and that Eastern lines shall in like manner protect like revenue of Western lines.
Sec. 3. That a line from Buffalo through Salamanca, Pittsburg, Wheeling, and Parkersburg to Huntington, W. Va., bo made the dividing line between Eastern and Western lines for the territory hereinafter outlined. That the Western lines shall not make joint rates from points east of that line for any points east of a line drawn from Chattanooga through Birmingham, Selma, and Montgomery to Pensacola.
SEC. 4. The Eastern lines, including the Richmond and Danville Railroad via Strasburg, or points east of Strasburg, and the East Tennessee, Virginia and Georgia Railway via Bristol, shall not make joint rates on traffic from points west of that line (Buffalo, etc.) to any points on or west of a line drawn from Chattanooga through Athens, Augusta, and Macon to Live Oak, Fla.
Sec. 5. The traffic from Buffalo through Salamanca, Pittsburg, Wlceling, and Parkersburg to Huntington, W. Va., and points on that line to the east of Chattanooga, Calera, and Selma shall be carried by either the Western or Eastern lines only at such rates as may be agreed upon.
Sec. 6. It is understood that the Eastern and Western lines will cooperate in the enforcement of the third and fourth sections of this second article.
Attention was then also called to the fact that while through rates less than the sums of the locals were established over through routes by connecting lines between Eastern aud Southern points, nevertheless, as a rule, with some exceptions, through routes were not established between Western and Southern points, and that the through rates
between the latter were combinations of the rates to and beyond the Ohio River crossings. In view of this method of adding up local or separate rates to make the through rate from one territory and not from another to common points of destination, it is not difficult to see the effectiveness of the rules of the association of competing carriers, above quoted, in carrying out their agreement as to fixing and keeping up rates and dividing freight, such as was held by the court in the caso above mentioned to be in violation of the statute known as the AntiTrust Law.
The power to withhold from through routing, and the agreement of all the competing carriers of the association to exact full locals of connections not conforming to its agreed divisions of business, were of course adequate to control the movement of traffic included within the agreement, so long as the published rates were adhered to. While the provisions of the association agreement before quoted are not found in the agreement of the Southeastern Freight Association, which, after the decision of the Supreme Court above referred to, was organized and took the place of the first-named association, the general rate situation and conditions remain, and we have no reason to believe that the practices of the carriers in respect thereto have been materially altered.
In paragraph 2 of section 3 of the act to regulate commerce, carriers are required to afford all reasonable, proper, and equal facilities for the interchange of traffic between their respective lines, and for the receiv. ing, forwarding, and delivering of passengers and property to and from their several lines and those connecting therewith.” It was held by the Commission in one of the above cases (3 I. C. C. R., 1) that among the “facilities” contemplated are not only through routes, but also through rates, and that the latter “become reasonable and proper when they are demanded in the interest of the public and when the route in itself is fairly reasonable.” While this was the manifest intent of Congress, it was further held that it could not be carried into effect, because the law did not go further and provide a mode of precedure for the enforcement of the right thus given when denied by one carrier to another. The result is that, in respect of through routing and through rating, this important provision of the law is practically inoperative.
This provision of our statute is substantially contained in the English railway and canal traffic acts of 1854 and 1873. The act of 1854, like our law, did not provide a mode of procedure for enforcing through routes and reasonable through rates; but, the necessity therefor having become apparent, the act of 1873 made such provision in cases where it was requested by a carrier. By the subsequent act of 1888, Parliament extended the remedy to shippers" interested in through traffic.” In our second and fourth annual reports an amendment was formulated embodying the provisions of the English statute, but limiting the remedy to a carrier requesting it. Our subsequent experience has led us to the conclusion that the remedy should be extended to shippers as well as carriers, as was done under the English act of 1888.
We are convinced by practical experience in administering the law that an amendinent such as is above indicated is demanded in the interest of both carriers and shippers.
One of the leading objects of the act to regulate commerce, as indicated particularly by the provisions of the second paragraph of section 3 and by the provisions of section 7, is to promote the uninterrupted flow of commerce through natural or proper channels and to destroy or render impossible monopolies in transportation. Nothing will be more conducive to this end than the securing to both carriers and shippers in proper cases the right of throngh routes and reasonable through rates. The denial of this right restrains commerce, prevents fair competition, and promotes monopoly, as was illustrated in the two cases to which we liave referred. Congress doubtless liad this in mind in enacting the provisions of the second paragraph of section 3 and the provisions of section 7 of the act. The will of Congress is, however, defeated under the present incomplete state of the law, and both carriers and the public are suffering in consequence.
STATISTICS OF RAILWAYS.
FINAL REPORT FOR THE YEAR ENDING JUNE 30, 1896.
The report of the statistician to the Commission for the year ending June 30, 1896, contained in Appendix D, was submitted to the Commission on June 30, 1897.
In accordance with the established custom, the statistics of railways compiled in this report are presented for the United States as a whole, and also for the ten territorial groups into which the country is divided for the purpose of localizing statistics. These groups may be roughly described as follows:
Group I.---This group embraces the States of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut.
Group II.- This group embraces the States of New York, Pennsylvania, New Jersey, Delaware, and Maryland, exclåsive of that portion of New York and Pennsyl. Fania lying west of a line drawn from Buffalo to Pittsburg via Salamanca, and inclusive of that portion of West Virginia lying north of a line drawn from Parkersburg cast to the boundary of Maryland.
Group 111.—This group embraces the States of Ohio, Indiana, the southern peninsula of Michigan, and that portion of the States of New York and Pennsylvania lying west of a line drawn from Buffalo to Pittsburg via Salamanca.
Group IV.–This group embraces the States of Virginia, North Carolina, South Carolina, and that portion of the Stato of West Virginia lying south of a line drawn east from Parkersburg to the boundary of Maryland.
Group V.-This group embraces the States of Kentucky, Tennessee, Mississippi, Alabama, Georgia, Florida, and that portion of Louisiana east of the Mississippi River.
Group VI.—This group embraces the States of Illinois, Wisconsin, Iowa, Minne. sota, the northern peninsula of the State of Michigan, and that portion of the States of North Dakota, South Dakota, and Missouri lying cast of the Missouri River.
Group VII.—This group embraces the States of Montana, Wyoming, Nebraska, that portion of North Dakota and South Dakota lying west of the Missouri River,